One may view California's options for managing energy supply and demand as a
portfolio in which the costs, benefits and risks are balanced. An energy
management portfolio mitigates risks through a well-balanced strategy of
improved planning, infrastructure investment, the adoption of a greater diversity
of energy supply sources, and the use of programs to moderate demand growth.
The “optimal” portfolio would be one that maximizes the risk-adjusted returns
or minimizes the risk-adjusted costs.

Each component of the portfolio comes with its inherent risks and returns. Wind
and photovoltaics have no future fuel risks, but have some capital and operation
risks. Efficiency has no fuel risks, but has implementation risks. Natural gas has
out-year price and supply risks, but may have lower costs. Although finding an
optimal mix is beyond the scope of this analysis, we can illustrate some scenarios
that might be achievable. Figure 6.1 shows 2010 peak gas consumption under a

Figure 6.1—Impact of Different Scenarios on Gas Demand

NOTE: Cross-hatched portion of bar represents uncertainty in the forecast.

Print this page

While we understand printed pages are helpful to our users, this limitation is necessary
to help protect our publishers' copyrighted material and prevent its unlawful distribution.
We are sorry for any inconvenience.